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on Energy Economics |
| By: | Chen, Natalie (University of Warwick, CEPR); Graham, Liam (University College London); Oswald, Andrew J (University of Warwick) |
| Abstract: | Nearly all post-war recessions have been preceded by oil-price shocks, but is this because spikes in the price of petroleum cause economic downturns? Most research has ignored an identification problem : oil prices and the state of the world economy are endogenously determined. This paper uses terrorist incidents as an instrumental variable. In an international panel of industries, we show that after correction for simultaneity bias — though not before — the price of oil has large negative effects upon profitability. Our results seem to lend support to the claim that oil-price spikes can be a source of recessions. |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:809&r=ene |
| By: | Baffes, John |
| Abstract: | This paper examines the effect of crude oil prices on the prices of 35 internationally traded primary commodities for the 1960-2005 period. It finds that the pass-through of crude oil price changes to the overall non-energy commodity index is 0.16. At a more disaggregated level, the fertilizer index had the highest pass-through (0.33), followed by agriculture (0.17), and metals (0.11). The prices of precious metals also exhibited a strong response to the crude oil price. In terms of individual commodities, the estimates of the food group exhibited remarkable similarity while those of raw materials and metals gave a mixed picture. The implication is that if crude oil prices remain high for some time, as most analysts expect, then the recent commodity price boom is likely to last much longer than earlier booms, at least for food commodities. The other commodities, however, are likely to follow diverging paths. On the methodological side, the results show that price indices, while providing useful summary statistics, need to be supplemented by individual commodity analysis. |
| Keywords: | Energy Production and Transportation,Markets and Market Access,Emerging Markets,Commodities,E-Business |
| Date: | 2007–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4333&r=ene |
| By: | Axel Dreher (ETH Zurich, KOF Swiss Economic Institute); Tim Krieger (University of Paderborn) |
| Abstract: | We empirically analyze convergence of European producer and consumer prices for diesel fuel and investigate the role of excise taxation. By comparing the speed of convergence of prices and taxes we find a surprisingly fast speed of convergence for consumer prices. While this can in part be explained by fuel tourism, the main driving force is producer price dynamics. Tax convergence contributes weakly to price convergence, but the overall effect is to slow down consumer relative to producer price convergence. |
| Keywords: | price convergence, diesel, international taxation, European integration, panel unit roots |
| JEL: | F15 H7 Q48 C2 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:pdn:wpaper:5&r=ene |
| By: | Olivier J. Blanchard; Jordi Gali |
| Abstract: | We characterize the macroeconomic performance of a set of industrialized economies in the aftermath of the oil price shocks of the 1970s and of the last decade, focusing on the differences across episodes. We examine four different hypotheses for the mild effects on inflation and economic activity of the recent increase in the price of oil: (a) good luck (i.e. lack of concurrent adverse shocks), (b) smaller share of oil in production, (c) more flexible labor markets, and (d) improvements in monetary policy. We conclude that all four have played an important role. |
| JEL: | E20 E32 E52 |
| Date: | 2007–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13368&r=ene |
| By: | Riipinen , Toni (BOFIT) |
| Abstract: | This work considers effects of energy market liberalisation in the countries of the former Soviet Union (FSU). Our analysis is based on a computable general equilibrium (CGE) model called the Global Trade Analysis Project (GTAP). This specialised model makes it possible to evaluate effects in a general equilibrium set-up. Energy market reforms are widely discussed in the literature, but the use of CGE models has been limited. In the main part of the paper, we perform two experiments. The first is a benchmark liberalisation experiment in which all government taxes and subsidies are removed. The second is an attempt to simulate an increase in the export capacity of energy commodities into the European markets. In general, we find that liberalisation of FSU energy markets would increase welfare in the EU countries, while in the FSU welfare would decrease. This result is mainly due to the terms of trade effect, as export prices of FSU countries decrease. |
| Keywords: | energy; computable general equilibrium models; former Soviet Union; welfare analysis |
| Date: | 2007–09–06 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2003_012&r=ene |
| By: | Rajeev Dhawan; Karsten Jeske |
| Abstract: | During the past thirty-five years, energy use as a fraction of output has dropped significantly at both the household and the firm levels. Therefore, we investigate a dynamic stochastic generalized equilibrium model economy's response to an energy price hike for different firm and household energy shares. Simulation results indicate that the economy's output response is mainly determined by the firm energy share. Increasing the household energy share while keeping firm energy share constant actually decreases the output response. |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:2007-20&r=ene |
| By: | Jing Gao (Département des sciences administratives, Université du Québec (Outaouais)) |
| Abstract: | In this paper, a comprehensive cost-benefit analysis is implemented for the project of Yueyang-Zhuzhou Oil Product Pipeline, considering all members of society as whole. We focus on the social welfare aspects of the project as well as the project's risk resistance capacity. |
| Keywords: | Project management, Cost-benefit analysis |
| JEL: | M |
| Date: | 2007–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:pqs:wpaper:032007&r=ene |
| By: | Gustafsson, Stig-Inge (Linköping Institute of Technology, Linköping University); Rönnqvist, Mikael (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration) |
| Abstract: | Large number of block of flats are today often connected to municipal district heating grids. Such systems became very popular in Sweden some fifty years ago. The reason for this was that cheap low-quality oil was abundant on the energy market but normal building owners could not use it in their own low-cost oil-fired boilers. They had to use better and more expensive oil for their heating purposes. In a district heating plant low-quality cheap oil could be burnt in a sophisticated, but expensive, boiler. Such a plant was also large enough to afford investments in other equipment, e.g. for sulphur reduction. Further, the municipalities saw their chance to get rid of many other sources of heat, such as coal and wood, which polluted the air for many inhabitants. It was better with one high and large chimney than thousands of small. During many years heavy oil was the dominant fuel in our district heating plants. Unfortunately, the use of oil made the trade balance of Sweden problematic and the country vulnerable to fluctuations on the energy market. The oil-crises during the 1970-ties made the situation even worse. Sweden had to get rid of the dependence of oil and district heating based on other fuels, or even electricity, where available alternatives. Environmental hazards, high prices and the obligation to reduce greenhouse gas emissions have led to modernisation of the plants and nowadays, a number of energy sources are in use, many of them with very competitive prices. Waste, garbage, worn out rubber tyres, demolished wooden buildings are used as fuels today. There are however drawbacks. Boilers and equipment for waste incineration are expensive devices and it is many times not possible to cover the total heat demand by use of garbage etc., as the only sources. The amount of waste might also be too small. Sometimes coal and oil must be used during peak conditions but taxes and emission allowances make such fuels expensive and the utilities try to do their best in order to avoid such fossil heat sources. If it was possible to reduce the demand when peak conditions emerge, fossil fuels could be avoided. Up to now, normal Swedish district heating tariffs were not thought to encourage such a behaviour, but as this study shows, the cheapest solution for a proprietor is many times to abandon district heating during the winter and use alternative solutions. The utilities of course want to sell district heat also during the winter but if the building owners want to reduce their costs as much as possible the district heating tariff tells them to use heat from the utility only during summer. |
| Keywords: | Optimisation; Modelling |
| JEL: | C61 |
| Date: | 2007–07–06 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhhfms:2007_017&r=ene |
| By: | Bosetti, Valentina; Carraro, Carlo; Massetti, Emanuele; Tavoni, Massimo |
| Abstract: | It is widely recognized that technological change has the potential to reduce GHG emissions without compromising economic growth; hence, any better understanding of the process of technological innovation is likely to increase our knowledge of mitigation possibilities and costs. This paper explores how international knowledge flows affect the dynamics of the domestic R&D sector and the main economic and environmental variables. The analysis is performed using WITCH, a dynamic regional model of the world economy, in which energy technical change is endogenous. The focus is on disembodied energy R&D international spillovers. The knowledge pool from which regions draw foreign ideas differs between High Income and Low Income countries. Absorption capacity is also endogenous in the model. The basic questions are as follows. Do knowledge spillovers enhance energy technological innovation in different regions of the world? Does the speed of innovation increase? Or do free-riding incentives prevail and international spillovers crowd out domestic R&D efforts? What is the role of domestic absorption capacity and of policies designed to enhance it? Do greenhouse gas stabilization costs drop in the presence of international technological spillovers? The new specification of the WITCH model presented in this paper enables us to answer these questions. Our analysis shows that international knowledge spillovers tend to increase free-riding incentives and decrease the investments in energy R&D. The strongest cuts in energy R&D investments are recorded among High Income countries, where international knowledge flows crowd out domestic R&D efforts. The overall domestic pool of knowledge, and thus total net GHG stabilization costs, remain largely unaffected. International spillovers, however, are also an important policy channel. We therefore analyze the implication of a policy mix in which climate policy is combined with a technology policy designed to enhance absorption capacity in developing countries. Significant positive impacts on the costs of stabilising GHG concentrations are singled out. Finally, a sensitivity analysis shows that High Income countries are more responsive than Low Income countries to changes in the parameters and thus suggests to focus additional empirical research efforts on the former. |
| Keywords: | Climate policy; Energy R&D; GHG stabilisation; International R&D Spillovers |
| JEL: | H0 H1 H2 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6426&r=ene |
| By: | Hattori, Keisuke |
| Abstract: | This paper investigates the welfare effects of international transfers of environmental technologies in open economies with international oligopoly and transboundary pollution, and shows that policy differentiation between donor and recipient countries and/or product differentiation between donor and recipient firms play a critical role in bilateral agreement on the transfer policy. The results come from the fact that the policy differentiation weakens the strategic relationships in environmental policy setting between governments and that the product differentiation weakens the strategic relationships in quantity choices between firms. |
| Keywords: | Technology Transfer; Environmental Tax; Oligopoly; Product Differentiation |
| JEL: | Q56 |
| Date: | 2007–09–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:4720&r=ene |
| By: | Trueck, Stefan; Weron, Rafal; Wolff, Rodney |
| Abstract: | We investigate the effects of outlier treatment on the estimation of the seasonal component and stochastic models in electricity markets. Typically, electricity spot prices exhibit features like seasonality, mean-reverting behavior, extreme volatility and the occurrence of jumps and spikes. Hence, an important issue in the estimation of stochastic models for electricity spot prices is the estimation of a component to deal with trends and seasonality in the data. Unfortunately, in regression analysis, classical estimation routines like OLS are very sensitive to extreme observations and outliers. Improved robustness of the model can be achieved by (a) cleaning the data with some reasonable procedure for outlier rejection, and then (b) using classical estimation and testing procedures on the remainder of the data. We examine the effects on model estimation for different treatment of extreme observations in particular on determining the number of outliers and descriptive statistics of the remaining series after replacement of the outliers. Our findings point out the substantial impact the treatment of extreme observations may have on these issues. |
| Keywords: | Electricity; price modeling; seasonal decomposition; price spike |
| JEL: | Q40 C2 C51 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:4711&r=ene |
| By: | John M. Gowdy (Department of Economics, Rensselaer Polytechnic Institute, Troy NY 12180-3590, USA); Roxana Julia (Department of Economics, Rensselaer Polytechnic Institute, Troy NY 12180-3590, USA) |
| Abstract: | This paper examine the economics of the mega-greenhouse effect under two scenarios. One caps total CO2 levels and the other limits annual emission rates. |
| JEL: | C53 D61 Q20 Q21 |
| Date: | 2007–08 |
| URL: | http://d.repec.org/n?u=RePEc:rpi:rpiwpe:0711&r=ene |
| By: | GRIMAUD, André; LAFFORGUE, Gilles; MAGNE, Bertrand |
| JEL: | H23 O32 Q43 Q54 Q55 |
| Date: | 2007–07–26 |
| URL: | http://d.repec.org/n?u=RePEc:ide:wpaper:7393&r=ene |
| By: | John FitzGerald (Economic and Social Research Institute (ESRI)); Richard S.J Tol (Economic and Social Research Institute (ESRI)) |
| Abstract: | A simulation model of international tourist flows is used to estimate the impact of including carbon dioxide emissions from aviation fuels in the European Trading System. The effect on global carbon dioxide emissions from international aviation is minimal: -0.01% at current permit prices, and –0.13% for the aggressive climate policy advocated by the Stern Review. In the latter case, total CO2 emissions from fossil fuels would fall by 0.004%, and total greenhouse gas emissions by 0.002%. Tourist numbers in Europe would fall by up to 0.6%, and would increase in the rest of the world. If the permits are grandparented, the airlines would receive a subsidy of €3 bln at current prices, and €40 bln for the Stern policy. If permits are auctioned, the effect on the airline industry would be minimal. Including aviation in the market for emission permits has almost no effect on the environment and may have a negative effect on the economy. |
| Keywords: | International tourism, tradable permit, carbon dioxide, aviation |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp179&r=ene |
| By: | Michel Damian (LEPII - Laboratoire d'Economie de la Production et de l'Intégration Internationale - [CNRS : FRE2664] - [Université Pierre Mendès-France - Grenoble II]) |
| Abstract: | Les réponses au changement climatique au cours de la dernière décennie ont négligé les enjeux relatifs à l'adaptation. Cette position n'est plus tenable une fois admise l'inéluctabilité du réchauffement climatique. Reconnaître les besoins d'adaptation contribuerait à mieux faire accepter le renforcement des politiques de réduction des émissions de gaz à effet de serre. |
| Keywords: | CHANGEMENT CLIMATIQUE ; ADAPTATION |
| Date: | 2007–08–31 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00168961_v1&r=ene |
| By: | Mehdi Abbas (LEPII - Laboratoire d'Economie de la Production et de l'Intégration Internationale - [CNRS : FRE2664] - [Université Pierre Mendès-France - Grenoble II]) |
| Abstract: | Cette note aborde la question de la mise en place d'une Taxe CO2 aux frontières de l'Union européenne dans le cadre des contraintes imposées par le respect des engagements du Protocole de Kyoto. La note étudie la faisabilité d'une telle mesure d'ajustement aux frontières dans le cadre du régime commercial de l'OMC. Bien que des marges de manoeuvre existent, la proposition d'une taxe CO2 aux frontières à très peu de chance d'être compatible avec le engagements commerciaux multilatéraux de l'UE. Dès lors, la note passe en revue les stratégies susceptibles d'être adoptées par l'UE en vue d'articuler régime de lutte contre le changement climatique et régime commercial. |
| Keywords: | CHANGEMENT CLIMATIQUE ; TAXE CO2 ; PROTOCOLE DE KYOTO ; COMMERCE INTERNATIONAL ; OMC |
| Date: | 2007–08–31 |
| URL: | http://d.repec.org/n?u=RePEc:hal:papers:halshs-00168960_v1&r=ene |
| By: | Karanja, Fredrick K; Kabubo-Mariara, Jane |
| Abstract: | This paper measures the economic impact of climate on crops in Kenya. The analysis is based on cross-sectional climate, hydrological, soil, and household level data for a sample of 816 households, and uses a seasonal Ricardian model. Estimated marginal impacts of climate variables suggest that global warming is harmful for agricultural productivity and that changes in temperature are much more important than changes in precipitation. This result is confirmed by the predicted impact of various climate change scenarios on agriculture. The results further confirm that the te mperature component of global warming is much more important than precipitation. The authors analyze farmers ' perceptions of climate variations and their adaptation to these, and also constraints on adaptation mechanisms. The results suggest that farmers in Kenya are aware of short-term climate change, that most of them have noticed an increase in temperatures, and that some have taken adaptive measures. |
| Keywords: | Climate Change,Environmental Economics & Policies,Common Property Resource Development,Global Environment Facility,Crops & Crop Management Systems |
| Date: | 2007–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4334&r=ene |
| By: | Richard S.J Tol (Economic and Social Research Institute (ESRI)) |
| Abstract: | A simulation model of international tourist flows is used to estimate the impact of a carbon tax on aviation fuel. The effect of the tax on travel behaviour is small: A global $1000/tC would change travel behaviour to reduce carbon dioxide emissions from international aviation by 0.8%. This is because the imposed tax is probably small relative to the air fare. A $1000/tC tax would less than double air fares, and have a smaller impact on the total cost of the holiday. In addition, the price elasticity is low. A carbon tax on aviation fuel would particularly affect long-haul flights, because of high emissions, and short-haul flights, because of the emission during take-off and landing. Medium distance flights would be affected least. This implies that tourist destinations that rely heavily on short-haul flights (that is, islands near continents, such as Ireland) or on intercontinental flights (e.g., Africa) will see a decline in international tourism numbers, while other destinations may see international arrivals rise. If the tax is only applied to the European Union, EU tourists would stay closer to home so that EU tourism would grow at the expense of other destinations. Sensitivity analyses reveal that the qualitative insights are robust. A carbon tax on aviation fuel would have little effect on international tourism, and little effect on emissions. |
| Keywords: | International tourism, tax, carbon dioxide, aviation |
| JEL: | L83 L93 Q54 |
| Date: | 2006–11 |
| URL: | http://d.repec.org/n?u=RePEc:esr:wpaper:wp177&r=ene |